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Cases of interest: February 2022

A summary of interesting or topical employment cases.

Idea Services Ltd v Attorney-General [2022] NZHC 308

High Court – Judicial review – Order suspending expiry of collective employment agreements 

At issue was whether an order, that suspended the expiry of collective employment agreements while an Epidemic Notice was in place, was lawful. 

The employer was a disability service provider with nearly 4,000 employees. About 2,800 of them were members of a particular union (the union). The employer and the union had a collective employment agreement (the collective agreement) that was due to expire on 18 October 2020. In September 2020, before the expiry date, the union began bargaining for a new collective agreement. Under s 53 (external link) of the Employment Relations Act 2000 (the Act), the commencement of bargaining extended the expiry of the existing collective agreement by 12 months to 18 October 2021. 

In March 2020, the Prime Minister issued an Epidemic Notice under s 5 (external link) of the Epidemic Preparedness Act 2006 (the EP Act), namely the Epidemic Preparedness (COVID-19) Notice 2020 (external link) (the Epidemic Notice). The issuing of the Epidemic Notice had the effect of giving the Governor-General, on the recommendation of a Minister, powers under s 15 (external link) of the EP Act to “modify any requirement or restriction imposed by [an] enactment”, in order to enable compliance during an epidemic. 

In April 2020, the Governor-General, on the advice of the Minister for Workplace Relations and Safety, used s 15 (external link) of the EP Act to make an order affecting collective bargaining while the Epidemic Notice was in place, namely the Epidemic Preparedness (Employment Relations Act (external link)

2000—Collective Bargaining) Immediate Modification Order 2020) (external link) (the Order). The Order included a provision that modified the expiry of collective agreements under s 53 (external link) of the Act. The provision (cl 8 (external link) )  effectively paused the countdown of the 12-month extension period in s 53 (external link) , for as long as the Epidemic Notice was in place. 

The Epidemic Notice authorising the Order expired after three months if not renewed. Up until the time of the High Court hearing, the Notice had been continuously renewed, every three months. Each time the Notice was renewed, the Order modifying the expiry of collective agreements automatically renewed. The effect for the employer was that the collective agreement between the employer and union remained in place, when it would have otherwise expired under s 53 (external link) of the Act. 

In October 2021, four days after the collective agreement between itself and the union would otherwise have expired, the employer applied for judicial review of the Order. The employer claimed the Order was unlawful and outlined five grounds for that claim (see para 51). One ground was that there was “an implied requirement to review immediate modification orders” made under s 15 (external link) , to determine whether they continued to be justified. The Order in this case had not been reviewed in more than 18 months (see paras 51, 134–137, 141). 

In November 2021, after learning of the judicial review proceedings, the Minister considered for the first time whether the continuation of the Order was justified. The Minister said he decided to recommend that the Order be revoked in February 2022 (see para 48). 

The High Court dismissed the employer’s first four grounds for judicial review (see paras 54–133). However, the High Court accepted the fifth ground, that the Order was unlawful because it should have been subject to review. The High Court held that Parliament could not have intended that the Order be continued without any review over an 18-month period (see para 141). The High Court held the lack of review was contrary to the rule of law and contrary to Parliament’s intention when enacting s 15 (external link) of the EP Act (see paras 139–147). 

The High Court made a declaration and orders as follows (see para 157):

the first and second respondents’ failure to undertake a review of the Order against the requirements of s 15 of the Epidemic Preparedness Act prior to November 2021 was unlawful. I direct the first and second respondents to complete reconsideration of the Order against the requirements of s 15 within 14 days of the date of this judgment 

Idea Services Ltd v Attorney-General [2022] NZHC 308 (external link)

Yardley v Minister for Workplace Relations and Safety [2022] NZHC 291

High Court – Judicial review – Vaccination mandate – Police and Defence Forces 

At issue was whether a vaccination order affecting Police and Defence Force personnel was lawful. 

Under the COVID-19 Public Health Response (Specified Work Vaccinations) Order 2021 (external link) (the Vaccination Order) the Minister for Workplace Relations and Safety (the Minister) determined that work carried out by certain Police and Defence Force personnel could only be done by vaccinated staff. Three Police and Defence Force workers who did not wish to be vaccinated brought judicial review proceedings against the Minister. The workers were facing termination if they did not get vaccinated by a certain date. 

The Vaccination Order was made under s 11AA (external link) of the COVID-19 Public Health Response Act 2020 (the Act). Section 11AA (external link) required the Minister to be satisfied that the Vaccination Order was in the public interest and was appropriate to achieve the purpose of the Act. Under s 11AA(2) (external link) “public interest” included “ensuring continuity of services that are essential for public safety, national defence, or crisis response”. The Minister said he recommended the Vaccination Order (see para 16):

based on the clear public interest in ensuring continuity of the services provided by the Police and the New Zealand Defence Force, both of whom are essential for public safety, national defence and crisis response. 

The stated purpose of the Vaccination Order was (see para 13):

to prevent, and limit the risk of, the outbreak or spread of COVID-19 by requiring specified work to be carried out only by affected workers who are vaccinated where it is in the public interest to do so.

The applicants sought judicial review of the Vaccination Order on the basis it was unlawful. 

The High Court accepted that the Vaccination Order was unlawful because it placed an unjustified limit on fundamental rights (see para 104). The High Court summarised its reasoning in para 105:

[105] In essence, the Order mandating vaccinations for Police and NZDF staff was imposed to ensure the continuity of the public services, and to promote public confidence in those services, rather than to stop the spread of COVID-19. Indeed health advice provided to the Government was that further mandates were not required to restrict the spread of COVID-19. I am not satisfied that continuity of these services is materially advanced by the Order. The actual number of affected staff — 164 Police staff and 115 NZDF staff is very small compared to the overall workforce of over 15,000 for each of the Police and NZDF. Moreover there is no evidence that this number is any different from the number that would have remained unvaccinated and employed had the matter simply been dealt with by the pre-existing internal vaccine policies applied by Police and NZDF. Neither is there any hard evidence that this number of personnel materially effects the continuity of NZDF and Police services.

The High Court set the Vaccination Order aside (see paras 104, 108). 

The High Court observed that its conclusion should not “be understood to question the effectiveness and importance of vaccination” (see para 107).

Yardley v Minister for Workplace Relations and Safety [2022] NZHC 291 (external link)

Cousens v Star Nelson Holdings Ltd [2022] NZEmpC 30

Employment Court – Failure to comply with Employment Relations Authority compliance order – Remedies – Fine 

At issue was whether the employer should be fined for failing to comply with orders in an Employment Relations Authority (Authority) determination; and then failing to comply with a compliance order the Authority issued in relation to the same determination. 

The Authority issued a determination finding the employer unjustifiably dismissed the employee. The Authority ordered the employer to pay around $6,000 in lost wages; $25,000 compensation; a $4,000 penalty and $3,000 in costs. When the employer failed to comply with the orders, the Authority issued a compliance order, requiring the employer to pay the sums within 14 days. After the employer failed to comply with the compliance order, the employee sought a fine against the employer in the Employment Court (the Court) under s 140(6)(d) (external link) of the Employment Relations Act 2000. 

The Court imposed a fine of $10,000 against the employer. In coming to that sum, the Court took into account that:

  • The breach by the company was wilful, deliberate and ongoing (see para 31).
  • The breach had significant impacts on the employee (see para 31).
  • There was a need to deter the employer from such conduct in future (see para 31).
  • There was a need to deter employers generally “so that they realise the importance of satisfying Authority orders” (see para 31).
  • The fine was proportional considering the nature of the breach and the considerable amount of money owing to the employee (see para 32).

The Court also ordered the employer to pay costs of $3,000 (see para 39).

Cousens v Star Nelson Holdings Ltd [2022] NZEmpC 30 [PDF, 210KB] (external link)

Labour Inspector v Olive & Jenn Co Ltd [2022] NZERA 54

Employment Relations Authority – Minimum employment standards breaches – Penalties 

At issue was the quantum of penalties the Authority should order against the employer for minimum employment standards breaches. 

The employer operated a nail salon. The employer accepted it committed the following breaches in relation to six employees:

  • failing to keep full wage and time records, in breach of s 130 (external link) of Employment Relations Act 2000.
  • breaches of the Holidays Act 2003 (external link) , including:
    • underpayment of leave entitlements
    • underpayment of wages for working on public holidays
    • failure to provide employees with alternative holidays
    • failure to pay employees for unworked public holidays
    • failure to keep full holiday and leave records.

Prior to the Authority considering penalties, the employer paid the employees all arrears that were owing.

The Authority considered what quantum of penalties should apply against:

  • the employer
  • its director
  • the person responsible for administering wages (who was also the husband of the director).

The Authority ordered the employer to pay a penalty of $40,000 and the director and her husband to pay penalties of $20,000 each as persons involved in the breaches. In coming to that decision, the Authority took into account the following:

  • Three of the workers were vulnerable due to being on temporary work visas (see paras 26, 39).
  • The breaches gave the employer “an unfair advantage in the marketplace” (see para 27).
  • The respondents had an attitude of remorse and a willingness to resolve matters after filing their statement of claim, but no reduction in penalty was warranted due to their repeated non-compliance previously (see para 38).
  • The recordkeeping breaches were longstanding and systemic (see para 39).
  • The respondents had previous interactions with the Labour Inspectorate, including previous Improvement Notices (see paras 40, 42).
  • The on-going and repeated occurrence of breaches meant penalties were necessary to reinforce the non-negotiable nature of minimum entitlements (see para 40).
  • There was a high degree of culpability (see para 42).
  • Consistency with other cases (see para 49). 

Labour Inspector v Olive & Jenn Co Ltd [2022] NZERA 54 [PDF, 52KB] (external link)

DCB v RTS [2022] NZERA 48

Employment Relations Authority – Breach of settlement agreement – Penalties 

At issue was whether the employer breached s 149(3) (external link) of the Act, when its Chief Executive Officer (the CEO) talked about the employee with the Human Resources advisor (the HR advisor) of her new employer. 

The employee and her employer reached a mediated settlement under s 149 (external link) of the Act. The settlement agreement (the agreement) required the parties not to disclose anything arising from mediation. The agreement also controlled what the employer could say if anyone made enquiries about the employee. 

The employee commenced working for a new employee. Seven months later, the original employer’s CEO heard, from another unrelated CEO (the other CEO), that the employee’s new employer was having trouble with her. The other CEO suggested the CEO should talk to the new employer about the employee. Subsequently the CEO spoke to the HR advisor at the employee’s new workplace. According to the Authority, the CEO held a “wide ranging conversation” about the employee and gave his “unfettered opinion” of the employee’s “management style and character traits conveyed in a way that can be described as prejudicial” (see para 23). The CEO also disclosed the settlement figure contained in the agreement (see para 43). 

The Authority accepted the CEO disclosed to the new employer “much more than what was permitted” under the agreement (see paras 34 and 43). The Authority ordered the original employer to pay a penalty of $12,000, $4,000 of which was to go to the employee. In coming to that figure the Authority took into account:

  • There were continuing consequences for the employee, as the disclosures raised questions about the employee’s honesty and integrity (see para 47).
  • Information that was disclosed could not be taken back and had serious consequences for the employee (see para 49).
  • The breaches took place seven months after the employee commenced new employment (see para 49).
  • The breaches were not inadvertent and were close to being deliberate (see para 49).
  • The employer did not take any steps to mitigate any adverse consequences of the breaches (see para 48).
  • The breaches undermined the integrity of s 149 (external link) agreements (see para 49). 

DCB v RTS [2022] NZERA 48 [PDF, 180KB] (external link)

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Page last revised: 11 March 2022

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